Workhorse Group Inc. (NASDAQ:WKHS) Q3 2023 Earnings Call Transcript

Workhorse Group Inc. (NASDAQ:WKHS) Q3 2023 Earnings Call Transcript November 14, 2023

Workhorse Group Inc. misses on earnings expectations. Reported EPS is $-0.14 EPS, expectations were $-0.13.

Operator: Ladies and gentlemen, greetings and welcome to Workhorse Group Third quarter 2023 Investor Call. As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Workhorse Group’s Vice President of Corporate Development and Communications, Stan March. Sir, you may begin.

Stan March: Thank you, Sherry. Good morning and welcome to all of you joining us on today’s third quarter 2023 results call. Before we begin, I’d like to note that we have posted our results for the third quarter, ended September 30th, 2023, via press release and have also filed our latest 10-Q and a separate 8-K. You can find this release, as well as the accompanying presentation, as well as the SEC filings in the Investor Relations section of our website. We will be tracking with the posted presentation during the call, so please follow along either through the link in the press release or through the website directly. Joining me on today’s call are Rick Dauch, our CEO; and Bob Ginnan, our CFO. The agenda for today can be found on Slide 3.

Following my opening remarks, I’ll hand it over to Rick, who will give you an update on the success that we’ve made on our strategic and operational priorities during the third quarter. Bob will then walk us through our financial results for the quarter and our revised 2023 full-year guidance. Rick will then wrap up before we open the call for questions. Our disclaimer can be found on Slide 5 — excuse me, Slide 4. Some of the comments that we made today are forward-looking and are therefore subject to certain provisions as well as to risks and uncertainties. You can find the full disclaimer statement in our periodic filings with the SEC, as well as in today’s press release. I’ll now turn the call over to Rick Dauch. Rick?

Rick Dauch: Thanks, Stan. Good morning, everyone. Thank you all for taking the time to join us today and your continued support of Workhorse. We’re here to talk about our achievements and results for the third quarter and the actions we are taking to position Workhorse for both near-term and long-term success. When speaking about the third quarter, what we’re talking about is a tale of two cities. On the one hand, we made important steps forward across our product roadmap that will set the stage for us to drive significant profitable growth in 2024 and beyond in all areas within our control. On the other hand, our results this quarter and our outlook for the remainder of 2023 were significantly impacted by our inability to secure HVIP vouchers in the third quarter.

I’m pleased to report that we have recently resolved this voucher availability issue with help from the CARB leadership team in just the past week. I’m proud of our team’s dedication and hard work here at Workhorse. And just over the two years since taking over the company, we have final vehicle assembly up and running for not one, but three new product lines, the W4C cab chassis, the W750, and W56 step vans. Anyone who understands the automotive industry realizes how tough and costly it is to design, test, and launch new products. And it typically takes at least three to five years. The Workhorse team did it in less than 22 months. At the same time, we now have two sellable drones in the market and are speaking to a greater number of prospective customers on the aero side of the business.

Workhorse is now poised to begin our growth phase, and it’s a testament to the incredibly talented and again dedicated team we have here today. With that, let me go into some of our key accomplishments for the quarter. On Slide 5, our most significant update across our commercial vehicles in the third quarter was launching production after completing FMVSS, durability and validation testing for the W56, our third product vehicle line of the year and the lifeblood of the company. I won’t be the first CEO of an EV OEM to say this since Elon Musk has already made the observation, but manufacturing truly is somewhere between 100 times to 1,000 times harder than making a prototype or trade show vehicle. Like Elon, we cannot emphasize enough how hard production is relative to design, and at Workhorse we have now launched full manufacturing of the W56 from start to finish in 22 months again.

We also increased our production rate to four W750 step vans a week and shipped multiple configured demonstration of W4CC vehicles to potential customers. We made continuous – continue progress expanding our dealer network and commercial footprint, signing up two new certified dealers, which include stocking orders to be filled over the next 12 months. During Q3, we received IRS approval as a qualified manufacturer for the Commercial Clean Vehicle Credit, which provides the Workhorse customer’s eligibility to receive up to $40,000 in federal tax credit per vehicle for deliveries of all Workhorse vehicles in 2023 and beyond. We added talent and sales staff with experience in commercial fleet and governmental sales, custom bodybuilding and up fitting experience, as well as beefed up our regional depth out in California.

Our corporate support and IT systems are working across all functions with the completion of our Phase 1 ERP project, a key back office enabler as we move from engineering and testing into production and sales. Our lean manufacturing practices at the plant have been reinforced, and we are working across our extended supply chain. The bottom line is that, we now have the people, products, processes, support systems, and business partners in place to grow into a viable commercial EV OEM. At Stables, we continue to transition and grow the EV fleet and expand our customer delivery responsibilities. Peak season starts later this week on November 18th, and we are ready to meet the surge in demand with a proven, capable EV fleet, which our drivers find to be much more reliable and much more cost effective than the old ICE fleet we acquired back in 2022.

The Aero business continues to generate revenue and has now sold units to both UPS Flight Forward and Valqari. Two more USDA grants were received in the quarter. And just to put those grants in perspective, net revenue impact is akin to selling more than 60 drones. So it’s meaningful and important business for us here at Aero. We completed the administration of the class action lawsuit and received approval from the shareholder base for an increase in share authorization by 200 million shares. At Union City, we completed installation and placed into service an in-house paint system, representing the last major near-term capital investment required for the facility until sometime in second half 2024. Finally, while there is strong demand for their vehicles, the team at Tropos ran some significant operational and financial headwinds during Q3.

As a result, we are working with the management team, their creditors, and partners to find a successful path forward recapitalization of the business. We expect Tropos to find a path forward during Q4. Moving to Slide six, let me talk a bit more about HVIP. Our ability to deliver W4CCs and W750s during 2023 was severely impacted by the lack of HVIP voucher availability in California. This was especially impactful during Q3 and a large portion of Q4. As I mentioned earlier, I am happy to report that we have successfully resolved this issue, and as of November 8th, CARB established a first of its kind program for intermediate vehicle manufacturers with Workhorse. As a result, we now have our own voucher pool here at Workhorse, a huge enabler for commercial EV sales.

Based on our months of efforts with them, and thanks to the problem solving efforts of the CARB Air Resources Board team, we broke through a major regulatory obstacle Workhorse was facing in the number one EV market in the United States, called California. As further evidence of the importance of this breakthrough, we added a new certified dealer in California during the last week who was awaiting the CARB voucher decision. This dealer committed to a stocking order and is working to secure a large fleet order using the family of Workhorse vehicles we can provide him. Turning to Slide 7, let me provide a few updates on our Class 4 vehicle programs. For the W4CC and W750, we have seen several positive market signals. First, we have our first repeat orders from dealers in both New York and California, which indicates increasing market demand for these products.

Importantly, we ship multiple demonstration vehicles to potential customers, including both box and reefer trucks in these two states. These are important opportunities for us out in the market. We also completed demonstration tests with the city government agencies in California and on two 30-day delivery routes for a major office supply company on the East Coast. All three demos were successful and we await customer decisions on future orders. We have W4CC trucks with box bodies out for further demonstration testing with a previous Workhorse customer which plans to convert 100% of their fleet to EV vehicles by 2025 to 2026. We are now capable of producing one W750 per day or four per week out of the plant. In addition to demos I mentioned and those in service at Stables, we have several other demo and fleet opportunities we are pursuing with large last mile parcel customers in both Q4 this year and early Q1 next year.

I also want to make clear that all of our vehicles across our commercial vehicle product roadmap are profitable at the contribution margin level, which stands in stark contrast to the legacy Workhorse vehicles. As we continue to scale production and grow the sales of our trucks, we expect to do so profitably. Moving to Slide 8. As I mentioned during the quarter, we began production of both the W56 strip chassis and step van, after successfully completing all FMVSS durability and validation testing as well as supplier part PPAP certification. We anticipate final HVIP certification through CARB to be completed in Q4 2023 with the W56. Drilling down a bit, we completed over 250,000 miles on the Navistar test track, which I had mentioned previously is a real, real hard test.

Again, we have PPAP’d all the individual parts on this vehicle. What this means in practical terms is that, we can now deliver automotive OEM-level quality products to our customers, something we think will differentiate us in the marketplace against other startups. We can provide either a strip chassis or a complete step van vehicle. We can paint them on site. We will be able to produce up to two step vans per day by the end of Q4 and ramp up to five to eight units per day in the first quarter of 2024. Put another way, our lead times for complete step van vehicles is basically 120 days compared to nine to 12 months of source from other parties based on what we’re hearing from fleets we’re calling on. I believe that is a real competitive differentiator for Workhorse in the step van segment.

A huge paradigm shift from what has been traditionally a capacity restricted duopoly situation for more than three decades. As 17 US states move to adopt the new CARB Clean Fleet mandates, Workhorse is well positioned to earn market share in the step van segment. On Slide 9, I wanted to share a picture of one of our first production step vans out in the field. We have initial production demonstration units already operating in California with multiple partners, and we have received extremely positive feedback on their performance on real-world tests last mile routes up to 125 miles. We’ll be able to put that truck together, including custom outfit packages, literally in six weeks from the time we discuss the concept to delivery with this potential California out in California.

We don’t think there’s any other customer who can do such a job. Importantly, we have strong customer interest in the W56 and we are confident in our ability to secure firm orders — purchase orders in the fourth quarter and beyond. The W56 will be a major driver of our growth and success moving forward as we capitalize on the transition to commercial EVs. As a reminder, we have the capacity to build up to 5,000 W56 units per year at our Union City Indiana plant on one shift, which would generate more than $1 billion of revenue. On Slide 10, we continue to successfully deliver last mile packages for FedEx Ground and incrementally grow route assignments in our Stables operations. We electrified about 70% of the Lebanon, Ohio-based fleet and are continuing to review options to partner with operators in incentive based states.

We’re also looking at several other approaches to get more trucks in the field. We have plans to add two W56 vehicles to our Ohio based fleet in Q4 of 2023. And we are in the first stages of data analysis on our ICE to EV transition white paper. I will say that, through this initiative, we are gaining tremendous real-world experience and more importantly, credibility with our future customers to better serve independent contractor fleet operators as they make the transition to EVs. On Slide 11, our aerospace team achieved notable milestones during the third quarter. We began drone assembly in our Mason, Ohio facility and sold and delivered three additional drone aircraft to customers. Workhorses also advance our efforts to receive FAA certificate approval for the HorseFly.

We entered the FAA process on the HorseFly on UPS Flight Forward’s FAA Part 135 drone airline certificate. Our Aero business is working closely with the team at UPS Flight Forward and the FAA and plans to have everything necessary to have the HorseFly approved for FAA Part 135 operations by the end of third quarter — the end of 2023. This is an important next step in bringing the HorseFly to market and reflects UPS Flight Forward’s recognition that our drones are safe, reliable, and capable. We also received two additional USDA grants in the third quarter, totaling about $1.1 million in additional funding. We are also exploring additional applications for both the HorseFly and Falcon drones with the USDA leadership team. That being said, as you likely saw on our press release this morning, in connection with our earnings announcement, the company has initiated a review of strategic alternatives for the Aero business.

We are proud of the advancements we’ve made across our Aero business. We’ve built and begun operating our manufacturing facilities and our market leading safe and reliable drones are drawing customer interest, both commercially and through government agencies, both here in the United States and overseas. With this foundation now in place, we determine that beginning of strategic review now is prudent to ensure we are unlocking the most value for Workhorse shareholders, while best positioning our Aero business to capture and fund future growth opportunities. Looking ahead, we will evaluate a broad range of options for the Aero business, including a potential sale of the business, strategic partnerships, or the continued execution of our strategic plans for Aero within Workhorse.

We are still in the very early stages of this review process and we will provide updates to it and when we have news to share. With that, I’ll now turn the call over to Bob to discuss our financial results for the quarter.

Bob Ginnan: Thanks, Rick. Let’s turn to Slide 12 to discuss our third quarter financial results. Sales, net of returns and allowances for the third quarter of 2023 were recorded at $3 million compared to $1.5 million in the same period last year. The increase in sales was primarily a result of the reversal of the sales allowance in the current period related to the sale of W4CC vehicles in the second quarter of 2023. Cost of sales decreased to $6.6 million for the third quarter of 2023 compared to $9.5 million in the same period last year. The decrease was primarily due to a $2.9 million reduction in inventory reserves and adjustments in the same period a year ago as a result of the disposition of C-Series inventory. Lower sales volume in the current period reduced costs by $1 million, which was offset by $1.2 million increase in employee compensation and related expenses as the company continued to expand its Union City, Indiana workforce to support future vehicle production.

Selling, general and administrative expenses for the third quarter of 2023 decreased to $11.8 million compared to $34.8 million in the same period last year. The decrease was primarily driven by a $23.9 million reduction in expenses associated with the settlement of securities and shareholder derivative litigation. This was $20 million in a non-cash stock settlement and about $3.9 million in legal fees. Employee compensation related expenses including non-cash stock based compensation expense decreased by $0.4 million compared to the prior period which was offset by a $0.8 million increase in professional services and other IT related expenses. Research and development expenses for the third quarter of 2023 decreased to $5.8 million compared to $6.1 million in the same period last year.

The decrease was driven by a $0.9 million reduction in consulting expenses partially offset by a $0.5 million increase in employee compensation related expenses as we move to production in the W56. Net interest income in the third quarter of 2023 was $0.4 million compared to zero interest expense in the same period last year. Net interest income in the current period was driven by interest earned on cash in the company’s money market investment account. Other loss for the third quarter of 2023 was $10 million as compared to $13.4 million in other income for the same period last year. Other loss in the current period represents the impairment of the company’s investment in Tropos resulting from the economic conditions and uncertainties that have significantly affected Tropos performance and financial position.

Other income in the prior period was recognized in connection with the sale of C-Series inventory that was formally written down to zero cost through inventory reserves. Net loss for the third quarter of 2023 was $30.6 million compared to a net loss of $35.4 million in the same period last year. Turning to Slide 13 to discuss our balance sheet. As of September 30, 2023, we have approximately $38.9 million in cash. Our cash burn during the quarter was down quarter-over-quarter as we primarily decreased spending on inventory and we expect this trend to continue through Q4 and into 2024. Importantly, we are taking major steps to strengthen our financial position and focus on reducing expenses to ensure we have the runway to execute our strategic plans.

We are in advanced discussions with third parties to obtain additional financing to support our growth plans. We are also evaluating other options to strengthen our liquidity position. Our 10-Q as of September 30, 2023, includes going concern language as a result of our slower than anticipated sales ramp and HVIP availability. As I mentioned, we have strong cash position of $38.9 million to fulfill our obligations and continue to operate, we are taking steps to remedy the going concern, including efforts to drive revenue growth, obtain additional financing and liquidity. We will continue to evaluate the best path forward and have several options to continue to fund the next phase of production and growth. Turning to Slide 14, we are providing an update to our 2023 guidance to reflect the HVIP voucher situation.

It significantly impacted our Q3 results in full year sales. We now expect to generate between $10 million and $15 million in revenue this year. The resolution of the HVIP voucher is positive news and provides momentum for us as we work through the remainder of 2023. I’ll now turn the call back to Rick to wrap up the call.

Bob Ginnan: Thanks, Bob. Let me briefly discuss our Q4 priorities, which are outlined on Slide 15. I can easily summarize these very quickly. Our largest single Q4 priority is straightforward, to build and sell trucks and drones. That’s it, build and sell trucks and drones. Plain and simple. Additionally, as Bob mentioned, we will focus on strengthening our financial position, and reviewing options to enhance our liquidity position so we can achieve our future growth plans. Before opening the line to questions, let me mention a few final thoughts. Being true pioneers in an industry going through a generational technology change is not easy. It’s tough, it’s hard, and sometimes it’s thankless work. No one in America could accurately forecast how fast or how slow the transition to commercial EVs will occur.

One thing I do know is that, we now have the people, the products, the manufacturing processes, the qualified suppliers, the experienced distribution partners in place to be ready when that transition does occur. Every fleet customer that has visited Union City and driven our truck has asked for a demo and every demo we have executed in the past 90 days has been successful. The foundations are in place at Workhorse for us to emerge as one of the survivors and winners in the commercial EV industry. We’re now ready to open the call for your questions. Operator please provide the appropriate instructions.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question is from Greg Lewis with BTIG. Please proceed.

Greg Lewis: Yes. Hi. Thank you and good morning and thanks for taking my questions. Rick, I wanted to touch a little bit more on HVIP. Clearly, congratulations on getting those final approvals. As we think about it, I guess, there was — I guess, looking at Q3, there were a handful of trucks sold. How much of those were related to HVIP?

Rick Dauch: You mean the lack of sales?

Greg Lewis: Well, I mean, you had 700,000, that looks, I mean — I’m thinking that’s five to six or seven trucks.

Rick Dauch: Yes, a couple of those trucks went out to some of the new dealers we have as part of our stocking orders. We really are blocked in California. As everybody knows right now, the cost of an electric truck is much higher than an ICE truck, driven mostly by the batteries. The government has put in place both at the state level and now at the federal level some significant incentives to help move into the EV segment. Without those incentives you aren’t really going to sell too many trucks. We are seeing some — not resistance, but I’ll say, there’s some weariness on the part of the fleets. Are these EV trucks really going to be capable of handling the duty cycles and the payloads and the ranges that they require on a day-to-day basis? I can tell you based on the demos our company has done side by side against others, we’re convinced and so are some of the customers that our trucks can do the job. I don’t know if they can say that about some of the other guys.

Greg Lewis: Got you. Thank you for that.

Rick Dauch: I’m not going to just [indiscernible] name any of the competitors, but EV trucks that are out there, some of the initial prototypes, especially from some of the startups are having some struggles is what I’d say.

Greg Lewis: Yes, makes sense. And then, so as we think about — you mentioned the dealer in California. Realizing we didn’t disclose name, any sense for the size of that dealer as we think about their track record, maybe in terms of size, any kind of color you can give us around that dealer.

Rick Dauch: Yes, I’ll give you a little color. I won’t give you the name. I’ll just tell you it’s in Southern California. It is a one-brand commercial truck-only dealer. That current brand he carries will not have a viable EV product until 2025 or 2026. And he basically said to us, I’m dead in the water with regards to the EVs in California, and I really want to partner with you guys. I can’t do that if you’re going to give me trucks without vouchers. And so he waited, very smart, I’d say, on his part. And now he’s signed up. We’re going to give him some stocking orders yet this year, and he’s already working on a deal that’s more than 40 or 50 vehicles.

Greg Lewis: Perfect. Super helpful. Thank you very much.

Operator: [Operator Instructions] Our next question is from Chris Souther with B. Riley Securities. Please proceed.

Chris Souther: Hey, guys. Thanks for taking my question. I was just curious on the review of the aerospace. Can you give us a sense of what like the — cash earned from that segment is today? Just wanted to kind of frame. Yes, we’re looking at like strategic alternatives and reviewing that business like what the impact on the financials is from that.

Bob Ginnan: Hey, Chris, it’s Bob. Currently, we’re spending about $700,000 a month in Aero, down from previous in the year, but that’s kind of where we are right now.

Chris Souther: Got it, okay. And then, on the overall kind of CapEx trajectory, how should we think about where we are as far as kind of readying the plant for scaling? Is there kind of additional CapEx that we really need to kind of focus on for the next quarter, couple of quarters here? Are we pretty set on that front?

Bob Ginnan: Yes, I think I kind of split that in two. I think for the rest of this year, if you look at our CapEx through the first three quarters, we’ll be down in the fourth quarter as we’re through most of those projects. And really from the plant perspective, we’ve got the capacity to scale without a lot of CapEx. We’ll have the typical maintenance type things going into next year. But the heavy lifting’s out of the way now with the finalization of our pain line.

Rick Dauch: Yes, I’ll jump in there, Chris. So W4CC and W750, we have the assembly lines fully tooled up. We’re waiting just on a couple minor manufacturing devices to put on the panels on the top of the W56, minimal money that will be spent this year. W56, we just got the AGVs in this week. I’m sure we owe a last payment to them once they’re run off. And we’re just finalizing the paint shop run off. So we have a little bit of payment there. Other than that, we’re set. 5,000 W56 a year. The W4CC, probably 800 up to 1,000 trucks a year, depending on the demand. Only money we really need for CapEx will be supplier tooling as we go into what we call the W56 cab chassis version, which will launch sometime next year. So, the capital has been spent, plants have been reconditioned, test track is in place, warehouses have been refurbished, paint shops in, everything we have is in place to be $1 billion dollar plus OEM.

Chris Souther: That’s great. And maybe just last one, you talked about being prepared to scale the business for a profitable growth 2024. Are we at a point here, you think where you have a sense as to kind of what that break-even revenue level would look like and timing around that. Just any kind of clarity you can provide at this stage would be I think helpful for folks.

Rick Dauch: Sure. Well, first of all, we’re actually just kind of getting into the budgeting process so we don’t really have answers there just yet. As I said, on I think a previous call, our positive gross margin is around 300 trucks a quarter, 100 trucks a month. We’ve not gotten into full cash flow, but you can probably do some math from there. But we think 300 is a magical number for us to get to step one here, and that’s positive gross margin.

Chris Souther: Thanks a lot. I’ll hop in the queue.

Operator: Our next question is from Craig Irwin with ROTH MKM. Please proceed.

Craig Irwin: Good morning, and thanks for taking my questions. So this past year as you were planning for sort of a higher revenue runway, there was a lot of work done developing customers and supporting those customers in procurement of HVIP vouchers, some of these vouchers out of New York, New Jersey, Massachusetts. It kind of means like some of the heavy lift for growth over the next year has probably been addressed. Can you maybe talk to us how you feel about the pipeline right now as far as deliveries once production is there and these trucks are fully certified to be handed over to customers that have been working to receive them? And is there any detail that you can share with us on the vouchers or how you feel about the eligibility of vouchers as these final certifications come through?

Rick Dauch: Yes, let me — our priorities are — we did all the truck, the brand new truck in less than 22 months. So we’re still working through stabilizing suppliers, stabilizing our own assembly processes and launching the paint plan. All right. So we have some work to do still to get towards the run rates and start picking up the pace. I’d almost say, Craig, we’re priming the pump right now. That’s internal, right? And we think we have that under control pretty well. When it comes to pipeline, we’re seeing various feedback from the marketplace. Obviously, the CARB mandates for clean fleets takes effect January 1st, 2024 in California. And we’re seeing a flurry of RFP activity out in California, primarily through government-funded organizations.

So you’re talking the state level, the city level, the county level of the municipalities, right? So that’s an opportunity for us. That’s why it was so important for us to get these HVIP credits and vouchers out in California. Okay. I’ll give you — we did two demos with fleets. One fleet is talking about buying 40 to 50 EVs, and one is talking about 30 or 40 EVs, but only if the CARB mandate stays in place on January 1st. You tell me, I don’t know. There’s a legal appeal against the California mandate by the California Trucking Association that should be heard in the next 30 or 60 days. My experience growing up in the auto industry for almost 50 years now, I’ve seen CARB loose battles, but I’ve never seen CARB loose the long war. Okay. So I think there’s a move going forward.

We’ve talked to some of the biggest fleet operators in California. You name it. FedEx, UPS, Rider, Penske, others, Cintas. And guess what? They’re all trying to figure out how fast they need to move to EV, and at what pace, right? Similar stories over in New York City. I think we’re seeing strong interest in New York City, New Jersey area, the metro New York City area, I’ll call it. That’s where we’re doing our reefer demos. We have a reefer out there. We worked with [Arctic Chill] (ph) to put a reefer on the back of the W4CC. It’s out running its route right now. That route is 20 to 30 miles only. But it makes over 100 stops a day at each restaurant as it delivers food, dairy products, et cetera. So we think that’s an opportunity. One of the customers that I inherited when we got here, which we ended up buying the trucks back right away, because all five trucks failed, has told us they are 100% committed to go to EVs in 2024, 2025, 2026.

They want Class 4 trucks that can carry 5,000 pounds. That’s exactly what the W750 and the W4CC can do. And so we have those trucks out there being tested, and I’m confident that we’ll finish those demos like every other demo successfully, and we hope to win those orders. But I can’t tell you if that’s going to be a 100 truck order or 10 trucks a quarter. That’s kind of the wild card right now here as we fight our way into this transition. Does that help?

Craig Irwin: That’s very helpful. I definitely appreciate that. So a key part of the value proposition to all of these customers is to reduce maintenance. And previously the company was saying there was about a 65% reduction in maintenance and operating costs for these trucks, for the Workhorse trucks. Your designs have evolved. I’m going to guess they probably got more efficient, more reliable. But can you maybe quantify for us what the customers are looking at as it’s still roughly two-thirds reduction in maintenance and operating costs? And how does this resonate with this customer group?

Rick Dauch: Yes, that’s a great question. I think we’ll have better, hard, factual data at the end of this peak season here in the fourth quarter that we’ll be able to share with you guys on our end of the year earnings call early next year. I can tell you right now at Stables & Stalls in a fleet of about 10 vehicles, we spend close to $30,000 a month in fuel. 70% of our trucks are now electric, and so we’re not spending nearly that much on fuel. We’ve had zero repairs of any of our W750s for any meaningful powertrain parts. We have had some damages on the side or on the bumpers when our drivers hit things and that kind of stuff like that. So I do think the numbers are going to be somewhere north of 60% or 70% in terms of TCO savings.

That’s our estimate today. We’ll be able to actually document it. And I want to reiterate, when we talk to these customers out, like we are in California, when we could tell them we have our own fleet of trucks and we’re making the conversion from ICE to EVs, their lights light up. One fleet I was at, the average age of the truck is 15 — they keep their trucks 15 to 20 years, the average age is around seven. We talked, we had a laugh over a cup of coffee about failed transmissions, break jobs, drive shafts, axle repairs, engines, all those kind of things like that. All that goes away with the EVs, right?

Craig Irwin: Understood. Well, congrats on the progress and thanks again for taking my questions.

Rick Dauch: Great, thanks.

Operator: We have reached the end of our question and answer session. I would like to turn the call back over to management for closing comments.

Rick Dauch: I appreciate your support. It’s not easy, this transition. It’s a little bit hairy sometimes. As Bob says, we’re well poised from an operational standpoint. We need to go sell trucks and drones. And we got to look at opportunities to improve the length of our runway so we can land this ship successfully here at Workhorse. We appreciate it. Look forward to seeing you out in the road. Have a great day.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.